Indonesian "yo-yo" Economy

By Dr. Iman Sjahputra, SH., Sp.N., LL.M.

Indonesian economy could analogously be compared with “yo-yo.” For those who have not seen it, a yo-yo is a toy made of two discs with an axis in the middle. The axis is tied with one meter long string, and to play it, the player shall stamp it up and down.

Economy of a country shall not be managed resembling playing a yo-yo, however, that might not be the case in Indonesia. Various economic indicators in this country has shown instability, for instance, weakening of Rupiah (IDR), high inflation rate, diminishing foreign exchange, massive subsidization of fuel, and the unsteadiness of balance of trade. US Dollar is recently traded at IDR 12,000,00, far exceeding the projection of the state budget at IDR 9,600.00 for 2013. Subsidization of fuel also exceeds its allocation for 2013 by IDR 24 trillion, even after the price of fuel has been increased. Moreover, inflation rate has reached 9.5% at the end of 2013, far exceeding the projection of 9% this year.

These facts have shown that government’s so-called achievement in stabilizing Indonesian economy, even their target of getting Indonesia to be world’s top 10 economy in 2025, are premature. In fact, Indonesia has become world’s “bin” for throwing their products, which can be seen from substantial amount of imported products can be found in this country.

Indonesian potential market has no benefit if the government cannot control it. Indonesia needs foreign country to utilize the market potential. Non-existence of comparative excellence on our labors might be the initiator. This dependency surely will minimize our foreign exchanges. Single simple problem in United States or other powerful countries might destabilize Indonesian currency. It is not surprising to always see Indonesia’s current account running deficit. While our local market is still flooded by foreign intervention, as a member of World Trade Organization (WTO), Indonesia shall not restrict imported products entering Indonesian region or in favor of domestic products, imposing high import tax or customs shall also be avoided, which worsen the quandaries.

While we have not had the capability to solve the economic problem, we are forced to face Indonesian political dilemma. We will enter the political “war” in 2014 election. Numerous candidates have made various promises, which cast many doubts, to make this country better, while in the meantime, corruption is still one of our strongest foes.

As Indonesian, we might be getting used to such situation, however, even though Indonesian economy is a “yo-yo economy,” we have to keep the yo-yo spinning without getting the thread entangled. At least, the first thing to manage is to keep our economy “spinning.”